SNB likely to mark down its growth and inflation outlook

Switzerland economic outlook has deteriorated on the back of the CHF appreciation. Consumer prices dropped further into negative territory in February, whereas the effect of the latest CHF appreciation has yet to be fully reflected in the inflation data. 

The recent sharp drop in the KOF leading indicator for growth poses downside risks to GDP in the forthcoming quarters. 

Barclays Capital notes ....

• We expect the SNB to mark down its growth and inflation outlook somewhat. However, in contrast to the Swiss 2012 GDP growth slowdown, which followed significant CHF appreciation and coincided with euro area recession, the latter is now clearly in recovery mode, which should at least partly offset the negative effects from the stronger Swiss currency on growth.